Photo Credit: Universal Music Group
UMG retreads Lucian Grainge’s contract through May 1, 2028, with a big salary chop — and much bigger upside performance and stock incentives.
Universal Music Group announced the extension of chairman and CEO Lucian Grainge’s contract through May 1, 2028. The amended agreement transitions Grainge from an all-cash compensation package to a combination of equity and cash. Most of the package’s value is paid in UMG equity and performance-based stock options.
“UMG is the world’s most successful music company, and there are incredible opportunities ahead for a company with the right leadership and vision,” says Sherry Lansing, UMG’s Chairman of the Board. “The UMG Board is resolutely committed to converting those opportunities and maximizing shareholder value for the long term. Only the right kind of chief executive can help achieve that goal, and Lucian is just the one to do it.”
“Through his clear vision and strong execution in building UMG into the industry leader, Lucian has also essentially created a new category of music company. This agreement is designed to drive both the sustainable success of UMG and long-term shareholder value.”
Under the new agreement, Grainge’s salary will see a two-third reduction from his current salary — down to $5 million. He will also be eligible for an annual bonus with a target of $10 million, subject to the achievement of performance criteria. The EBITA bonus from Grainge’s prior employment agreement is moot; he is only entitled to the contingent bonus under his previous employment agreement on a pro-rata basis through Q1 2023.
The equity components of the program include annual grants of $20 million comprised of up to 50% Performance Share Units (PSUs) with yearly goals set by the board of directors. The remainder is comprised of Restricted Share Units (RSUs).
The announcement adds that the size of the potential equity grant falls within the parameters previously disclosed and voted on by shareholders at UMG’s 2022 Annual General Meeting in the company’s 2022 Global Equity Plan and UMG’s Executive Directors Remuneration Policy. The board will also seek approval at UMG’s 2023 Annual General Meeting for a supplement to the existing Executive Directors Remuneration Policy concerning Grainge’s new remuneration.